The Future Of Content: Protection Is In The Business Model -- Not In Technology

from the competing-with-free dept

If I received a dollar
every time I get a question along the lines of "how can the content
industries compete with FREE?" -- I would be traveling first class
everywhere I go. Underneath this question I often find my favorite toxic
assumption: "less control over distribution means less money."

This belief is as tired
as it is poisonous: enforcing control (when trust is really what's
needed) will yield instant disengagement, which swiftly and surely will
translate into dwindling revenues -- as the music industry keeps proving
again and again. If you believe in control rather than value and trust,
the content business of the future is not a good hunting ground for
you.

Take eBooks: despite
clear and present proof that DRM has proven disastrous in selling digital
music (and now is pretty much history), technical protection measures
are still being looked at to 'secure distribution'. When will
they ever learn?

The thinking that the
digital distribution of content must be controlled to achieve any kind
of reasonable payment is fundamentally flawed because of this not-so-futuristic
realization: in our open, mobile, social and digitally networked economy,
content publishers need to offer their goods in a way that no longer
centers on the distribution of units (digital or physical) as the key
revenue factor. The idea of just selling copies is toast - selling
(i.e. offering) access is where the money is. Kevin Kelly said it years
ago: we must sell what can't
be copied, what's scarce, not what is ubiquitous.

The irrefutable trend
is that the window of opportunity of 'selling copies' (be it iTunes,
eMusic, the Kindle or the iPad) is rapidly closing. The real opportunity,
the TeleMedia
Future, is in selling access
and presenting a constant stream of up-sells (i.e. added values and offering
content-related experiences). Remember, as Mark McLaughlin so
righly pointed
out in the HuffingtonPost recently, consumers have never really paid for content - they
paid for distribution! And now, distribution means Attention and Access.

Imagine when buying access
to eBooks, you wouldn't just pay for the authorized enjoyment of the
authors' words, but you would also gain instant access to highly curated
and socially-networked commentary, a fire-hose of meta-content provided
by your most important peers and friends that may also be reading these
books, and their ratings, explanations, slide-shows, images, links,
videos, cross-references -- and maybe even some direct connections with
the author or the publisher.
In an access-based, bundled
and cloud-centric content ecology, being a legitimate and authorized
user enables engagement, conversation, relevance, personalization, meaning...
i.e. it unlocks really valuable benefits for the user. Connect with
Fans + Reasons to Buy (as has been mentioned on this blog a few times,
before, I believe) - that's where the money is.

In music, streaming-on-demand
will without a doubt be available 'for free' (i.e. bundled and packaged
by 3rd parties) or advertising supported, while many added values above and beyond the mere reproduction of music will not - no matter
whether WMG's
CEO Edgar Bronfman thinks
it's a good idea 'for the industry' or not.

Just imagine where an
access-to-the-cloud model could go next: if I want a high-definition
version of my favorite opera or that Blue Note Jazz Club concert from
last night I could buy a premium package that provides it. If I want
to share my personal play-lists, ratings and comments with my Facebook
friends, and get access to their content, as well, I can add the 'social
network option' to my package. If the price is right (micro-transactions,
anyone...?), I'll buy - because I am already hooked on the music.

The music industry needs
to ask itself this question: if a permanent, unprotected download of
a song would cost only $0.10, or if an ad-supported version of a on-demand,
all-you-can-eat music service would be seamlessly bundled into your
mobile phone subscription - would anyone still bother to scour the web
to find badly ripped, virus-laced tracks for free? Would we need 3-Strikes
or HADOPI or Digital Economy Bills?

Yes, I know, that price
point sounds ridiculous for those record label CEOs that used to sell
CDs for 15-25 Euros a piece, but hang on a second: if they can get 95%
of the users to buy access at a much lower price (and almost
zero cost of duplication and distribution!), and in that process really
engage with them, the fans would also do the marketing for them - i.e.
share the links. Sounds like a great model to me. But of course: selling
access at a much lower (or feels-like-free) price to quite literally everyone only makes
sense if it actually connects directly and smoothly to a multitude of
up-selling possibilities, such as interactive versions of eBooks, high-definition
versions of online radio shows, albums or concerts, in-depth analysis
and audio/video commentary for news, etc.

Now, content storage
is starting to move from my own computer or my hard-drives into the
cloud - and I think this is very good news for content creators, publishers
and rights-holders because it makes it even easier to engage and up-sell
to those new
generatives. Crucially, the
answer to the constant quest of monetization is also in the cloud: I
believe most people will soon stop sharing the actual media files (since
they are getting increasingly larger and larger, and therefore more
unwieldy) and will share only the links, the bookmarks, the metadata
or the tags, and that should be a boon for the content industries.

The perfect test bed
for 'Media as a Service' (MaaS) may unfold soon, with Apple's new
iPad or Google's Tablet (hopefully). Extending the concepts mentioned
above, rather than blocking my wife or my kids from sharing an eBook
with me it would be much more logical if I could easily read her book,
as well; but beyond the 'copy of the words' all else would not be
available without a micro-transaction on my part, i.e. I would not have
instant access to the cool video clips, the updated links, the footnotes,
the ratings, etc; i.e. all that valuable context that will make eBooks
so much more powerful would be out of my reach until I validate my own
access.

Here is my message to
publishers and content owners: lower the prices for access to your content
to the point of unanimous excitement, use open standards and technology
platforms that work for everyone, everywhere; bundle and package as
attractively as you can (then: repeat). Team up with ISPs, mobile operators,
advertisers and device makers.

Remove all the reasons
that your users may have to avoid your new toll-booths and skip the
desired conversion to 'paid' - the lower the hurdle for legitimate usage
and paid engagement, the higher the added values, the less you will
have to worry about 'competing with free'.

You're not quite there

Most of the things you're listing as "up-sells" are still non-scarce. You say that we have to sell what can't be copied, but footnotes, context, enhanced versions, sharing playlists - all of that can still be copied.

And micro-transactions - they might as well be perpetual motion machines. Everyone thinks it would be cool if we had them, and tons of people have claimed to have done it, but no one has ever actually seen one work.

Re: Re: You're not quite there

Not to mention they strongly reinforce the feeling of being "nickel and dimed." It's not about skimming something off of everything people do, it's about selling people stuff they actually want. Microtransactions only work when they are truly optional, a la the Dungeons and Dragons MMO.

Re: Re: You're not quite there

Yeah, look at the DC plastic bag tax. For five cents per bag added on to your bill at the grocery store, bag usage dropped from 22 million to 3 million in a month. And there was no signing up for a micro-transaction provider or anything like that.

Re: You're not quite there

I think the point is that you would have access to a centralized, moderated community of like-minded fans to interact with. The notes, versions, etc aren't the selling point; a gated community is the draw.

Still not sure if that would work... several pieces aren't in place yet. You'd need a centralized distribution point with clean interface, people who know how to do proper community management, platform folks (hardware and software, e.g. Apple/Facebook) on board, and people on the back end working with the artists and media producers.

I think the trend is inevitable, but it's going to be a few (several?) more painful years before the industry as a whole arrives.

Re: Re: Re: You're not quite there

"Gated" anything is a bad idea, it implies closing yourself off from the rest of the world. Throw the gates wide open and invite people in! Then figure out what they actually want, and sell that to them.

Re: You're not quite there

I was going to add this same remark. If all upsells and 'New Genratives', are all digital then what is your point, really? If we can lock off access to those things, why not the original thing in the first place. So your wife should be able to share an e-book with you but you will be locked off from the digital videos that enhance that? Well, if you can lock off the videos, than I guess video/filmmakers are all set then, they can just lock off their videos?

Some Dangerous Assumptions Here

I entirely agree with the core of what you're saying, but you've slipped some ideas and examples into this piece that I think miss the mark.

You say "The idea of just selling copies is toast - selling (i.e. offering) access is where the money is," and you're right. Which is why I was surprised to read where you went after that.

$0.10 for music tracks is too much. $0.01 for music tracks is too much. The goal isn't to get people to buy music tracks, and it isn't even to "upsell" people to some kind of "premium" version of the tracks. The social community is already there - what you need to look for are ways that particular fans connect with particular non-scarce things. It is access - not access to the meta-content that already proliferates, but access to the artists themselves, opportunities to feel special, and unique experiences.

Media as a service? Maybe, but as Mike often points out (and you acknowledge in the beginning of this post) thinking it will get people paying for "upgraded" versions of the same stuff is erroneous. The "cool video clips, the updated links, the footnotes, the ratings" are organically generated as part of liberated content. The real access is far beyond that: access to authors, physical items, and unique experiences.

Selling the same stuff at low price points would have been the way for the content industries to cash in on the digital transition. That boat has sailed - going forward it's all about connecting fans directly to the people creating the content they love through ways they will uniquely appreciate.

Re: Some Dangerous Assumptions Here

I agree, for a LICENSE to the track it's too much. However charing 1 cent (or whatever the most minimal traceable currency unit is) to cover the transaction cost of providing the high grade source and a 'clearsign' style validation that you do indeed have an authenticated copy isn't too much.

Though charging that for each track is a bit much, if you wanted to buy an entire 10-50 track album it would make more sense to have the license work fee be about a base currency unit and then bill something sane for the transfer costs. It probably shouldn't every cost more than 0.05 USD even for a raw ultra-high-grade uncompressed transfer. (As if anyone would want that though; lossless compression is quite possible for such data.)

Re: Re: Some Dangerous Assumptions Here

I don't see much point in paying money for anything that is infinitely reproduceable with little to no cost. I'd be far more interested in paying for something that makes the non-scarce item unique to me.

your comments (above)

Jon and Dean: comments, ratings, footnotes etc cannot be copied in the same way as a simple download because they need to always refer to the legitimate source to matter, they are not linear (i.e. the grow, change, get adapted). As to microtransaction if something like Flattr is widely adopted I think it could work -- I would certainly use it to spread my support around.

Re: your comments (above)

Restricting access to a community fundamentally misunderstands how these things work. It's organic: people are going to talk about a book they like regardless of whether or not they've paid a fee. Trying to lock that up stifles the very engine that drives a work's popularity.

Re: your comments (above)

Re: your comments (above)

You're still talking about technology-based protection. You may be right that they're harder to copy, but it's still just a bunch of bits. If the stuff is really desirable, someone will figure out a technological solution to make it easy to get.

At a glance, Flatter looks interesting, but I suspect they're going to have a hard time getting people to put up a monthly fee.

Re: your comments (above)

Flattr is not a microtransaction, more a microdonation. There is no exchange, simply a fractional disbursement of a 'charity budget'.

For transactions you need an exchange, e.g. "If you give me (write and publish) another song I'll pay you $5"/"If my fans offer me enough money I'll write and publish another song a little sooner"

You certainly don't need copyright - because you're not selling copies any more (even at hundredths of a cent), you're selling your art directly to your fans.

I wouldn't advise anyone to try selling something that the prospect prefers making themselves. That would be like selling bread to bakers. But the publishing corporations may well have such a low IQ that they will persist in their insanity of doing anything that might enable them to carry on selling copies to people who prefer to make their own.

Problem solving and you.

A business exists to solve a problem. Media companies (Newspaper, books, music, movies, etc) need to realize that the problem they were (should be?) solving has changed.

In the days of yore, the problem was getting media to me. It was really a pain in the ass, getting a CD/Book/Movie/News from its creation, into my hands. Unfortunately for them, this is no longer a problem-- I can get my hands on all of this Media easily, cheaply and quickly. I don't need them to keep on solving that problem. It's gotten to the point that they are attempting to *stop progress* to keep this problem relevant.

Luckily for them, at the exact moment the old problem was solved, a new problem was born: Holy shit, there is a lot of Media out there.

Now, if someone were to go and find a way to sort through all the gigs and gigs of media and make sure that the stuff I want to see/hear (maybe with a customizable 'random' factor) got to me in a simple, elegant, *central* source-- hell yeah, I'd pay for that. Monthly. Forever.

the YOU dont own it and rent it ISP IP service

BCE tried it and failed with a video store
despite throttling INTERNET to 5% during when 90% of people would like to use it except there own video store

ROGERS tried it and failed
SO YOU SEE the having music as a service fails because we dont want the service

I want the tunes i want how i want when on want on what ever i want.

P.S. since the riaa lawsuits on disabled and kids started i have NOT bought nor gone to the mpaa movie theaters nor bought any media, all you did was teach me to bypass you totally
and now what ya gonna do? raid 500 million peoples homes and expect that your not going to cause an actual revolution and that musicians and actors wont start needing better security then the president of the united states?

Economics 101

In theory we live in a capitalistic society. What that means is that no producer is guaranteed revenue from what is produced. Revenue is derived from the fact that customers are willing to pay for the item.

When goods become scarce, the price goes up. Now if the goods become infinite the price should decline. If the goods cost money to produce, then the cost should decline to the cost of production/distribution. If the items cost nothing to produce/distribute, guess what, the price should fall to $0.

People say they want less government intrusion into our lives.

Put all this together, free distributable products.

But what about the copyright toll-both? If you pay royalties based on a percentage of cost and the cost is $0 then the author is getting his/her fair-share royalty payment. After all - being good free market disciples - we wouldn't want to artificially prop-up the cost of a product. Let the free-market establish price.

Scarcities

The first three are why an official, but realistically priced (very extreme marginal profit per sale) business model will work.

Users will know exactly where to go and be directed by search engines to, the highest quality and fastest methods of obtaining the content they desire; the ready access to them will satisfy the convenience factor as well.

Value is attained by the small marginal profit; it simply wouldn't be cost effective to infringe on the copyright (which is why it wouldn't even be necessary for that kind of restriction; merely the competing service provider perspective).

The main reason to buy at all would be a shared community experience, and the network effect of connecting with both the fans and creators of the content. Your input may even help shape the course of events as it provides another perspective to those creating the story.

staying under the radar is easy to do, it's just inconvenient. using encrypted connections, private trackers, ip blockers, and all that other stuff makes downloading slow and/or inconvenient.

i would love to just pay someone (my isp, the MAFIAA, whomever) $10 or $20 a month for the copyright equivalent of diplomatic immunity. where every time my ISP gets a nastygram about something i have downloaded they/i can look up my registration, see that it's valid, and go bother someone else.

it's a voluntary fee, not blanket or compulsory one, and people who don't want to pay, don't download, or don't want their money going to someone they dislike can just not pay.

the same infrastructure that is in place to spy on me and my downloads could be used to find non-payers AND collect marketing data... think of nielsen ratings/billboard pop charts for movies, tv shows, software, books, etc. based on what's being downloaded.

the info could also be used to distribute royalties via ASCAP and all the other places.

Re: Re: sounds like the "piracy pass"

Re: sounds like the "piracy pass"

That's the "Voluntary Collective Licensing" plan that just doesn't hold water. For one, the last thing anybody needs is another corrupt organization "disbursing" money to artists. For two, there isn't anything wrong about sharing files, there is no need to "go legit." The files are being "sold" for their market price, $0.
As for me, I'm tired of people trying to cook up ways to sell me digital files. I'm not at all interested in paying for that, unless I'm paying somebody to write a new song and send me the mp3.

Re: sounds like the "piracy pass"

Love the idea, one I've advocated in the past. I own a vinyl copy of "Led Zeppelin IV" circa 1974. That's my license. If ever I was hauled into court for owning mp3 copies of "Stairway to Heaven", holding up my copy of the record should get me out and force Atlantic to eat my legal bills.

Where it gets tricky is when, in the spirit of community, I make that mp3 available to others on the presumption that they, too, have vinyl copies but no means to acquire a digital version.

I think it is simple as figuring out how to create unique experiences and figuring out how to profit off those experiences. People go to concerts and sporting events to experience something different not just consuming the content. You could sit on your couch and catch the game or jam out to the music. So why do people cough up quite a bit of money to go to these events. Why couldn't you create a similar experience over the net.

Re:

Exactly. What about paying a few dollars to be a part of a live webcast of a show (that will be released for free on YouTube later)? The free recorded videos build excitement for the next webcast, when fans get the opportunity to share in the experience themselves, and even more excitement for the in-person show (for people able to travel there).

Scarcities

The first three are why an official, but realistically priced (very extreme marginal profit per sale) business model will work.

Users will know exactly where to go and be directed by search engines to, the highest quality and fastest methods of obtaining the content they desire; the ready access to them will satisfy the convenience factor as well.

Value is attained by the small marginal profit; it simply wouldn't be cost effective to infringe on the copyright (which is why it wouldn't even be necessary for that kind of restriction; merely the competing service provider perspective).

The main reason to buy at all would be a shared community experience, and the network effect of connecting with both the fans and creators of the content. Your input may even help shape the course of events as it provides another perspective to those creating the story.

Nitpicks

I had originally intended on making the point that Jon has already so eloquently expressed, i.e. that the "premium" content listed in the article is just as subject to infinite copying as the "free" content. I also have the nagging feeling that the author's supposition that "comments, ratings, footnotes etc cannot be copied in the same way as a simple download because they need to always refer to the legitimate source to matter" is questionable.

Otherwise, two small nitpicks regarding the current state of file sharing.

First, the comment about "badly ripped, virus-laced tracks". Badly ripped is one thing, though I haven't particularly had any issue with that since migrating from Napster, eMule, and other such P2P networks to BitTorrent. I know that when I download a track, or an album, or an entire discography, the worst I'm likely to encounter is that the encoding isn't done at quite as high a bitrate as I'd like. But frankly the difference in quality isn't large enough for me to care that much. And if you're getting *viruses* from MP3s, for god's sake, you're doing it wrong and should have your Internets taken away. I have to question whether the author even realizes that viruses only propagate through executable code.

Similarly, I find the statement that "the actual media files...are getting increasingly larger and larger, and therefore more unwieldy" highly dubious. The MP3 format has been around for *fourteen years* now. (God, I feel old.) Since then you've seen the average bitrate go up--I don't see a lot of 128Kbps files around anymore--but 320Kbps still seems rare and VBR encoding has mitigated the inflation of the file size somewhat. FLAC is much larger, and appeals to audiophiles, but its popularity still pales in comparison to MP3. In other words, the size of the media files, at least for music, has increased slowly and incrementally--and the increase in broadband speeds and saturation has vastly outstripped it. The size of text (ebooks, etc.) is more or less constant for all practical purposes. The only place you *do* see a high degree of inflation is in video files, due to the increased amount of information in HD and Blu-Ray video. Even then, if you're talking about digital distribution the bits are going to have to travel in the same number, whether from a legitimate or an illegitimate source. I really don't think this is going to make a single bit of difference (see what I did there?) to piracy rates, or to how willing people are to go out and get what they want from unauthorized channels.

Re: Nitpicks

I also thought the arguement about file sizes being unwieldy to be nonsense. Availiable storage, both physical and cloud, has increased faster than file sizes, and as pointed out above, broadband speeds have also increased. In the not too distant future even the largest video files (3D, full 1080p, or whatever the next latest/greatest video/audio standard is) will be able to be downloaded in minutes if not seconds. The size of the file will be irrelevent. Not sure why this was even mentioned, as it has little to do with his point.

Yes! This is the Direction!

Great post, very similar to another one I saw this week. I begin to see a shift in thinking towards what I think just might be a popular and prosperous path. Some of the points in this post are flawed, IMHO, but the whole thing is directionally correct, which is the main thing.

I concur that the existence of a viable 'cloud' environment is key to future business models. Not because it offers new DRM features (which it could) but because it offers new value to the consumer, value that is going to appreciate for the forseeable future. What is this value? Convenience and portability. These are values that have been proven time and again, each with lots of examples.

Convenience becomes a factor because now that media has become ubiquitously available and free, the burden of managing huge digital libraries has shifted to each individual consumer. Digital video is making that burden a lot more of a pain in the butt. I now have terabytes of storage that I have to manage in my home to store my media and back-ups of my media. You know what, it sucks! It's making me question what the point is when so much of what I have is available from FREE streaming services. You know what else? I've grown really tired of trying to create and maintain personal playlists of my media. It takes too much time and after a few plays, it gets boring. Pandora does a great job and I don't have to DO ANYTHING. Here's what I want: A streaming service that is capable of blending some of the rare tracks that I've ripped from my old vinyl albums. Oh wait! That sounds like LaLa and Apple just acquired them. Guess I won't have to wait long for the first version.

The other demand that is going up - related to convenience - is portability. I now have a laptop, a netbook, an iPhone, an iPod, a Media PC, an AppleTV, an Xbox, a PS3, and now an iPad. All are fully capable of playing my digital content. The Apple devices sync pretty well with iTunes but I don't want to be a slave to iTunes and the other devices not so much anyway. Give me Pandora (or LaLa or whatever) and take this problem away from me! Please!

I will gladly pay for an effective service to provide me with these values, and I think many others will too. The cost pays for itself if I no longer have to maintain a growing storage farm within my home!

The potential is there and I think the killer services are coming. Not here yet, but coming. It's funny laziness (sloth) is what will overcome the file sharers.

A couple of quick sub-points:

- Open your minds when you think of micro-transactions. The casinos are experts at this. They sell you a bundle of micro-transactions (chips) to remove friction from the tables. Xbox live sells you points. It's all the same and it works. There are many, many models that can be applied.

- To those who still think maintaining a hoard of pirated digital media is what people want - I suggest that you have just become the next version of 'old media fans'. You are the latest example of people who resisted shifts from vinyl to tapes, from tapes to CDs, from CDs to MP3s. Good luck with that!

Re: Yes! This is the Direction!

Why manage terabytes of collected media files rather than let the cloud do it for you? For me, the primary reason is permanence. And that's a *big* reason. If I'm relying upon a service, I'm completely at the mercy of that service to maintain the content I want and serve it up to me when I want it. And there's absolutely no guarantee there.

As with most services on the Web, chances are high that at some point any service I rely upon for media consumption will die off. And then I'll have to search for another service that offers the same content with the same degree of availability. Even assuming the service survives, there's no guarantee that (for example) they won't decide that music from isn't worth holding onto and purge it from the service. And if my Internet service goes out, or I'm on the go in an area where I don't have service, or if my service (or theirs) becomes bogged down to the point that the media can't stream smoothly, that's a serious issue for me. A number of the arguments that apply to the recent generation of DRM (what happens if you have Internet fail, what happens when the company and their lovely authorization servers go away) seem in at least an analogous sense to pertain to MAAS as well.

I like MAAS, and I avail myself of it on occasion, but it's not a replacement for my substantial collection of media files and I doubt it ever will be. I use the two for entirely different purposes. If I want to discover new music or listen to a more random selection than what I've got on my computer or iPod, I go to Pandora or Last.fm. If I like something and want to keep it around, it gets downloaded and takes up (semi-)permanent residence on my hard drive. If that makes me a dinosaur, so be it. But we're talking economics here, and there are a hell of a lot of other dinosaurs out there who feel the same way. So good luck leveraging MAAS to "overcome the filesharers". You'll be fighting a losing battle.

Maas = New Gatekeepers

Not that this inherently a bad thing... But let's be clear on what Media as a Service is. You mention iTunes. They are now gatekeepers just as any major studio or network was/is.

It is not incredibly cheap or easy to get a film on there. Apple has announced their new iPhone 4.0 terms which looks like it is severely cutting down access to developers, meaning no flash or any other outside programming.

Netflix has set itself up to be a potential clearing house. They are already doing Maas, the concept is not new. On smaller levels so is Indieflix, Distribbr, any number of them. It will come down to who has reliable taste and who is worth the ticket price. It will be like HBO v Showtime, etc.

How many of these can we pay for? Well, someone might get the idea to group several together into a network of sites. But who would have the money for that other than the studios or cable/internet providers?

We need to hear a solution that includes truly intangible, unrepeatable experiences that are a way for artists, musicians, filmmakers to make money. All these 'upsells' and 'new generatives' are just more digital content to copy for free.

Re: Maas = New Gatekeepers

http://contingencymarket.com is such a solution. It enables artists to sell their work directly to their fans - no copies are sold, so no copyright is needed - the fans make their own copies and sell or share them as they see fit.

E.g. Artist sells a song to 1,000 fans for $1 each.

Before: Artist has talent and fans, wants more of fans' money. Fans have disposable income, but want another song from their favourite artist.
Deal: Artist offers to produce & publish song for $1,000. 1,000 fans offer $1 each.
After: Artist has $1,000 and a song. Fans have a song and are down $1 each.

Comment on business model

The Future Of Content: Protection Is In The Business Model - Not In Technology .
Gerd, I get your e mails everyday. As you say thie is the way old guys communicate and I have to tell you that if there were an effective and efficient Business Model for protection, it wuld already be out there. There are many suggestions, tips, ideas of trying to get to that Model but I have not heard of it from you or any other realiable speaker and have not seen it. When that happens, well WOW!!!

Re: Comment on business model

There is an effective business model for protection, it's called the natural right to privacy and the liberty to exchange one's labour in a free market.

No-one can take your intellectual work from you unless you part with it voluntarily, and in terms of business, in exchange for whatever the market will bear - which if you have a lot of fans can be a considerable sum.

Comment on Mobile

Mobile operators never grasped on to this and I've been debating with them for years about it.
They've always thought if you made the content available (no matter how hard it was to get) mobile users would buy. They placed all effort in high speed networks rather than easy delivery and now they've become the dumb pipe that they always feared.

Couldn't Disagree More...

...with almost every point in this article. I will respond to only two.

The first question you ask in the article hits the nail on the head. No industry can compete with free, and consumers have proven time and time again that they will go to great lengths to devalue the content they consume. An example of this is the Ad Blocker add-on to Mozilla Firefox. People aren't even paying for most online content (only indirectly paying for the access) and yet we have an independently developed program to remove what is in most cases the only revenue source for content providers.

The next point you make is that trust is really what's needed. I agree with you in part here, but in my opinion you're approaching the issue from the wrong perspective.

As Apple's iTunes has shown, en route to becoming the largest music retailer in the world, companies are more than willing to sell unprotected content once we the consumer's have earned level of trust that we will respect the value of said content. Trust in the provider already exists, and is largely irrelevant. Take news media, for example. We see a situation where we have highly regarded, and trusted content providers (we'll use the NYT's and WSJ). Two of the nations longest standing and most reputable journalism outlets are dieing off for one primary reason: the value of the content they provide is not respected by most people in today's "I want, I want, I want" culture. People prove that they trust these traditional sources, as individuals continue to frequent their sites and blogger's continue to regurgitate their reports. These two outlets are now instituting plans to charge for the content (NYT's is still in development) that people already have trust in. Unfortunately, as is being shown with the WSJ's paywall, people are not willing to pay for trusted content when they have other (usually less reputable or accurate), free sources.

All that being said, consumption now exists at a level which was largely unheard of prior to the explosion of the internet. We have "access" to hundreds of thousands of content sources now (mostly fragmented), and we want a lot of it. With the fees we pay to our internet providers, and each content provider, the costs add up all too quickly. Perhaps the only real solution is to break our culture of its "I want, I want, I want" mentality.

First off, it just moves the problem around: instead of charging for non-scarce media, it suggests charging for other non-scarce things, like posting lists of links on Facebook. Oops -- we can already do that now, for free, and if you try to stick a tollbooth in front of that people will just leave Facebook for MySpace or elsewhere.

It also suggests making the lo-def free and charging for the hi-def. That's no better than the current system.

The "Media as a Service" thing is particularly laughable. Yes -- large media files are unwieldy. Right now they're unwieldy to store and even more unwieldy to download. A terabyte drive can be had for less than $200 and can store a hundred hi-def movies (9GB .mkvs at 720p with good quality) or 1500 lo-def ones (700MB .avis at 480p with moderate quality). Downloading these is a pain; storing them somewhat less so and getting rapidly less so. It's easy to buy another TB every few years now. It's not easy to fatten your pipe past about 5Mb/s in most places, and most filesharing sites/systems are slow and unreliable much of the time, particularly for less-popular content. Centralized "official" servers for movies would be overwhelmed with traffic and would be very slow and unreliable -- you can get a foretaste of Gerd's "media as a service" trying to pirate stuff via RapidShare right now. Ouch.

It's much easier to download once and retain a copy than to download over and over again, particularly high definition video, and is likely to remain so for the foreseeable future.

"Media as a service" is unlikely to ever get off the ground. If it does, on some day when we have gotten ubiquitous cheap gigabit broadband, it will probably be long past the point where content, including high def, is generally accessed free of charge.

media as a servive

Media as a Service

as to comment 42 I don't think the concept of having media in the cloud is laughable, at all. Just because I would store my books, movies, and music in the cloud does not mean I wouldn't be able to download it when / where I need it, for one. Why do I need TB drives if I have access to what I want anytime anywhere and just draw down what I need? How many times do you watch a movie over and over again? For music, your argument is nil already, btw.

As to comment 41: Nathaniel is dead wrong when pointing to the NYT and others saying the are dying because people are not willing to pay for the content. That's not why (and the NYT is NOT dying, anyway): they are in trouble because they offer an expensive, printed product when everyone is switching to low-cost digital access. It's a mismatch of formats - again, people are willing to pay when they see value and the price is right. That must be the misison

Glad Tidings

Great article Gerd! You are on point my friend. While I'm very limited on what I can say, due to confidentiality agreements, I will point out that we are consulting with clients here in Nashville that are currently developing a platform very similar to your observations.

This new platform will, nonetheless, be a very powerful addition to the music industry and is designed to benefit both consumers and artists alike across all genres. By creating value for the consumer and reducing the margin of error for each artist, it will be the most relevant offering available in the marketplace today.

As we are able to release any additional info relating to this new platform, we will be posting on our twitter and facebook pages FIRST, prior to releasing ANYTHING to mainstream media, so stay tuned.

Glad Tidings

Great article Gerd! You are on point my friend. While I'm very limited on what I can say, due to confidentiality agreements, I will point out that we are consulting with clients here in Nashville that are currently developing a platform very similar to your observations.

This new platform will, nonetheless, be a very powerful addition to the music industry and is designed to benefit both consumers and artists alike across all genres. By creating value for the consumer and reducing the margin of error for each artist, it will be the most relevant offering available in the marketplace today.

As we are able to release any additional info relating to this new platform, we will be posting on our twitter and facebook pages FIRST, prior to releasing ANYTHING to mainstream media, so stay tuned.

I liked the idea and having some space available on a Mac located on another continent, I gave it a try. The client is not as flexible as in Mozy in terms pelletizing process of selecting what gets backed up and what not, but the lack of features is made up in simplicity and efficiency.